Answer the Following Questions Using the Information Below:
Kramer Enterprises

question 48

Multiple Choice

Answer the following questions using the information below:
Kramer Enterprises reports year-end information from 2015 as follows:
$\begin{array}{lr}\text { Sales (160,000 units) } & \$ 960,000 \\\text { Cost of goods sold } & 640,000\\\text { Gross margin } & 320,000 \\\text { Operating expenses } & 260,000 \\\text { Operating income }&\$60,000\end{array}$ Kramer is developing the 2016 budget. In 2016 the company would like to increase selling prices by 12.5%, and as a result expects a decrease in sales volume of 9%. All other operating expenses are expected to remain constant. Assume that cost of goods sold is a variable cost and that operating expenses are a fixed cost.
-What is budgeted sales for 2016?

• A) $1,080,000
• B) $1,000,000
• C) $982,800
• D) $873,600

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Definitions:

State Excise Tax

Taxes imposed by a state on particular goods or activities, such as alcohol, cigarettes, and gasoline.

Federal Excise Tax

A tax imposed by the federal government on the sale of certain goods and services, such as gasoline, alcohol, and tobacco.

Efficiency Loss

The loss of economic efficiency that can occur when the balance between supply and demand is not achieved or when market conditions lead to a misallocation of resources.

Marginal Benefit

The additional satisfaction or utility gained by consuming or producing one more unit of a good or service.